Open Forum

New Delhi, 23 July 2025

Innovation & Research

VITAL FOR INDUSTRY,GROWTH

By Dhurjati Mukherjee 

Government officials, economists and experts have long stressed that innovation drives industrial growth and global competitiveness. Despite this, manufacturing in India has not grown significantly, and exports have only slightly increased. 

It is only in the last few years that there has been some improvement on both fronts. As per statistics, India produces the second highest number of engineers and there are expectations that within a few years the number would exceed that of China, which happens to be the world leader. But it is a well-known fact that China is way ahead of India in terms of technological expertise, cost effectiveness and quality of products and competes with the US on equal terms. In some sectors, it is the leader. There is a need for serious introspection in the matter.  

The past decade is seeing that young entrepreneurs of the country want to take on the world and make inroads into the global arena. India’s economic system is dominated by industry leaders who are giants domestically but have very little presence internationally. Questions arise why these big companies are unable to enter international markets in a big way. While the domestic market is getting large, these companies want to concentrate domestically rather than face international competition. For becoming a global player, the obvious answer lies in emphasising on innovation and use of modern technology to fight competition. 

Obviously, they must concentrate on research and come out with innovative products that could be acceptable globally. The need for active collaboration with higher educational institutions has been stressed but very little headway has taken place. What is most important is the need for industry to allocate more funds for Research &Development, which is quite poor compared to global standards. 

Delving into statistics, it has been found that in FY2023, the total expenditure on R&D by the Indian industry was USD 7.4 billion. This was less than a fifth of what Alphabet as a single firm spent on R&D. If India has to see high economic growth of say 7-8 percent over the next two decades to cross the USD 20 trillion-mark, its industry will need to lead the way through its investments in R&D. 

It’s therefore imperative that Indian industry must capitalise on its strengths in pharmaceuticals & biotechnology, automobiles and auto parts, aerospace and defence and software and computer services. It must continue to grow its capabilities in sectors such as electronics and electrical equipment and seek new opportunities in sectors like healthcare equipment & services where there is a clear and strong domestic demand. 

At the same time, it must prepare itself for the rapid developments taking place in areas like artificial intelligence (AI), machine learning (ML) and quantum computing which are likely to disrupt several if not all industries. The global push in AI is reflected in the significant jump in R&D spending in the global software and computer services sector. 

Another aspect is the fact that competition can always encourage companies to build state-of-the-art products. If necessary, the government has to aid innovation to universities, reducing bureaucratic hurdles to accessing and using funding, even while demanding more high-quality research from the faculty. The Anusandhan National Research Foundation is a step in the right direction, but its resources need to be multiplied manifold. This is unfortunately not happening, and most universities are starved of funds. The need for industry collaborating with educational institutions and carrying out specific projectshas been repeatedly reiterated. But except for a few IITs, this is virtually absent. 

As regards flow of funds, over the years statistics reveal that research funding has decreased, barring that for the IITs and some other research institutions. Most universities, which are old and quite well known, are starved of funds, not just for payment to research scholars but also for upgradation of laboratories. Does the government believe that only funding a handful of institutions in such a large country will bring in the much-needed innovation? 

The focus is primarily on technology and fundamental and applied sciences, which are mostly taught in universities, are by and large neglected. This trend cannot be allowed, more so when the country is emerging as a big global player and has an ardent ambition of becoming a developed nation by 2047. There has to be an all-round focus both on technology upgradation and science research because the synergy would yield the desired results. 

Industry bodies have a big role in charting out areas where collaboration would yield results and formulate a time-bound action plan. They should also identify institutions and have project-based collaboration. This would go a long way in gearing up the process of innovation, thereby increasing exports and reducing the country’s dependence on imports. 

In this connection, it is heartening to know that rare earth magnets would be domestically produced in Hyderabad and the Centre has tasked the National Institute for Transforming Science & Materials (NFTSM) to carry out this work in partnership with industry players. Reports indicate that such manufacturing would be ready within the next three-four months, which is highly encouraging. 

Thus, innovation must be given prime consideration, and the government should allocate more funds for the purpose. Not just the few specialised IITs but also many other universities spread across the country. Private sector funding for innovation and research has also to be ensured through collaborations in projects that are useful for industry. 

The industry organisations and associations mustconsider evolving a plan of action in this regard and the government needs to ensure its successful implementation. If these measures are taken up earnestly,the quality of Indian products would improve significantly and be in a position to compete in the global market. It goes without saying the contribution of manufacturing in India’s GDP needs to increase in the coming years whileexports of various products need to find new markets and more acceptability internationally. A steady and concerted effort to march ahead is how India would reach the position it aims for.---INFA 

(Copyright, India News & Feature Alliance)